| I learned that an asset is one that generates positive | | | | When I think of the idea that money keeps |
| cash flow. If it does not generate income, then it is a | | | | streaming into my bank account with little or no |
| liability. | | | | work, I am really excited! Since the idea is so |
| For example, a car is liability if it does not generate | | | | enticing, I decided that I want to focus my attention |
| positive cash flow. If I rent out a car and it earns a | | | | on building passive incomes. But what are the possible |
| monthly rental income, I will need to do a simple | | | | ways to build passive income? Especially when I do |
| calculation to determine whether it is an asset or | | | | not have much savings at hand? |
| liability. Basically, I need to subtract the car loan | | | | One way that I can think of is to write a book. The |
| monthly repayment and maintenance costs from | | | | main cost will be time on my part. But if I am able to |
| monthly rental income. If the result is positive, then it | | | | convince a publisher to publish and sell my book, then |
| means that the car generates a positive cash flow | | | | I will be able to earn royalty fee based on the |
| and thus it is classified as an asset. If the result is | | | | number of books that are sold. This is a possible |
| negative, then it means that means the car | | | | source of passive income to build. |
| generates a negative cash flow and thus it classified | | | | The other way that I can do is to build a network |
| as a liability. | | | | marketing business. It is also know as multi-level |
| With this new definition of what is an asset, I | | | | marketing business. In this kind of business, the |
| understand that if I want to build up my wealth, I | | | | distributor will need to get the license to sell the |
| must investment only in assets that can generate | | | | products from a parent company that is a network |
| positive cash. But do I just simply invest in any | | | | marketing company. The fee to be a distributor is |
| assets that generate me positive cash flow? | | | | usually very affordable. |
| For example, if I were to invest in a business that is | | | | The distributor then tries to sell the products to |
| generating positive cash flow and this business take | | | | potential customers and earn commissions from his |
| up all my time, is this consider a good investment? | | | | sales. Also, he can build a network of distributors |
| Since my time would be totally taken up, I would not | | | | under him. If he meets his sales quota and his team |
| have the time to think of building other sources of | | | | of distributors meets their sales quota, he gets paid |
| income. Thus, I do not think that this is a good | | | | for commissions from his own sales as well as his |
| investment. | | | | team of distributors. |
| But what if I were to invest in a business that | | | | But if he did not meet his sales quota and his team |
| generates positive cash flow but required minimum | | | | of distributors meets their sales quota, then he will |
| involvement on my part? If that is the case, then I | | | | not get any commissions from the sales of his team |
| will considerably free to pursue the building of other | | | | of distributors. The tricky part to create this stream |
| sources of income. My conclusion is that I should be | | | | of passive income is how to choose a network |
| selective towards investing in any positive cash flow | | | | marketing company that is legitimate, stable and big |
| assets. But I still have doubts regarding my | | | | growth potential. |
| conclusion. | | | | No matter which source of passive income that I am |
| When I learned from the Rich Dad series that I | | | | trying to build, I notice one thing in common. Hard |
| should be focus on building passive income, my | | | | work is definitely required to these building the |
| doubts are removed. That means I should be | | | | passive incomes. |
| investing in assets that generate positive cash flow | | | | * DISCLAIMER * |
| as a passive income. | | | | The author only provides the material and information |
| What is considered a passive income? The way I | | | | as a layperson's views about an important subject. |
| have understood about passive income is that even | | | | The materials and information are from sources |
| if I were to do little or nothing for a long time, the | | | | believed to be reliable and from his own personal |
| cash will still come to me continuously. | | | | experience, but he neither implies nor intends any |
| For example, if I were to invest in a piece of real | | | | guarantee of accuracy. |
| estate that generate a positive cash flow by renting | | | | All the materials, information and procedure in this |
| it out, then the work that I need to do per month | | | | book are only the author's personal opinion. You must |
| will be like ensuring that my rental income is collected | | | | consult your own professional advisor and other |
| promptly. | | | | reputable sources on any matter that concerns you |
| Maybe I can even automate this part by debiting the | | | | or others. |
| rental income from the lessee's bank account and | | | | The author, publishers and distributors are not |
| crediting it into my bank account directly. Then, the | | | | competent and do not profess to give legal, |
| only work that I need to do is to ensure that my | | | | accounting,medical or any other type of professional |
| rental income is credited into my bank account | | | | advice. The reader must always seek those services |
| monthly. | | | | from competent professionals who can review your |
| The opposite of passive income is active income. | | | | own particular circumstances. |
| Active income means that I have to keep working to | | | | The author, publisher and distributors particularly |
| ensure that the cash keeps coming in. The moment | | | | disclaim any liability, loss, or risk taken by individuals |
| that I stop working, the cash also stop coming in. A | | | | who directly or indirectly act on the information |
| job is an example of an active income. The employer | | | | contained herein. All readers must accept full |
| will stop paying me a salary if I stop work. | | | | responsibility for their use of this material. |